Advantages and disadvantages of indirect exporting

Isaleny Delgadillo

ThursdaySep 3 at 7:55pm

Manage Discussion Entry

The challenges that organizations face in the effective transition between selling products using the traditional brick and mortar marketing channel and selling products online is product availability. As stated in our textbook the most critical and essential reason for most companies to establish a positive Web presence is that the Internet has become a primary source of product information for many prospective customers. Their reliance on company-sponsored websites, product evaluation sites, and social networks for product information continues to grow each year. Even for products that cannot be purchased online, the Internet has become a principal destination for consumers seeking information. Increasingly, people expect to easily find the information they want in a user-friendly format on the Internet. Companies that fail to meet this expectation will certainly suffer as a consequence (Finch, J. (2012). Stores like Zara and Pier1 are having trouble making a strong appearance because they are limited worldwide. Zara has less than one hundred stores in the US. Stores have mostly shifty to online but being available is what will keep them in true business. Despite the fast shipping and fast service human interaction is always appreciated.

What are the benefits and limitations of selling through a storefront and online? The benefit of selling through a storefront is not having to wait. Products may also be limited which may give value to your purchase. The upper hand to selling online is of course having multiple sellers to buy from. Reference: Finch, J. (2012). Managerial marketing . Retrieved from https://ashford.content.edu

Raul Machin

YesterdaySep 7 at 8:57pm

Manage Discussion Entry

Finch (2012) said, "The characteristics of e-commerce and the new economy have challenged many traditional conceptions about products, branding, and the role of the customer in the process of creating unique goods and services" (Ch. 13.1). As the world is turning rapidly to an internet-based market system, we have seen the advantages and disadvantages of selling through a storefront and online. Most companies are quick to point out that the primary benefit of an e-commerce business is the low financial cost. Generally, starting an e-commerce business cost less than a physical storefront. If an organization were to open a brick-and-mortar business, things that would need to be considered are the cost for rent, renovation, renting a location for storage space. Then purchasing the products, you hope to sell. Therefore, having the convenience of running an online enterprise gives a business owner more flexibility. Finch (2012) stated that online businesses use "Channel disintermediation, which refers to bypassing or eliminating one or more intermediaries from the supply chain or channel of distribution" (Ch. 13.1). Making it easier for the online business to thrive and compete with its competitors as this method cut out the middleman, and generally, helps the company keep a bigger piece of its profits.

Nonetheless, there are significant challenges and hurdles that a company needs to be aware of when moving strictly to an online business. As we read above, there are many alluring benefits for an organization to target the online audience. However, it does come with potential drawbacks. Finch (2012) said, "traditional channel partners will be directly harmed as a result of any migration toward direct sales. Cutting out wholesalers, retailers, agents, and distributors from some portion of the firm's sales will necessarily create channel conflict. These intermediaries may, in turn, provide fewer sales support for those products and shift their backing to competitive brands" (Ch. 13.1). In other words, the action of moving strictly to online selling may lead to the channel intermediaries to back up competitors to your business. "In the transition of moving from brick-and-mortar to online, the organization must understand the fundamental principles of the supporting infrastructure required to complete online orders and deal with customers directly" (Finch, 2012, Ch. 13.1).

Strategies that companies can use to enhance their online e-commerce presence. In the case of Zara and Pier-1, it would be to enhance there search engine optimization. Finch (2012) said, "This is the process of improving the features of a website so that search engines can find the pages easily and index them. The goal of SEO is to have a company's webpage ranked as high on the search results list as possible" (Ch. 13.1). For these companies to be successful in working in the domain of the internet, there needs to be a whole restructuring of their marketing techniques. For these companies, the first order of business would be to evaluate their email marketing strategies and how they reach former and new customers. They must also tap into the social media marketing platforms such as Facebook, Twitter, Tik Tok, Instagram, and Pinterest to promote their products and services. However, before the company can move forward, they need to do a market analysis to define the goals of the company. What are the objectives? Is it to increase sales, grow traffic, or expand the targeted audience? Once a corporation has determined its trajectory, it should move forward with hiring a consultant to establish new guidelines for targeting its clientele.

References

Finch, J. (2012). Managerial marketing . Retrieved from https://ashford.content.edu

Hearl Tackett

ThursdaySep 3 at 5:53pm

Manage Discussion Entry

Chapter 12 in our text speaks about the importance of intermediaries in the marketing mix as businesses that work together to get the product from the manufacturer to the consumer (Finch, 2012). The New Economy in Chapter 13 involves e-commerce and the disintermediation or elimination of those intermediaries that were so important (Finch, 2012).

What are the advantages and disadvantages of both?

There are advantages and disadvantages to each of those systems and, with the increased focus on globalization, it has become more and more important to be efficient at both. The benefits of the traditional intermediary system can come from cost savings because of the expertise and specialization that each of the intermediaries have in the process of moving that product to the consumer, time savings because of the intermediaries professionalism can speed the delivery of a product to a consumer, customer convenience because sometimes the consumer wants the convenience of having the product in their hand on the same day they go to the retailer to purchase it, promotions are sometimes given to move a product faster and to a greater audience, and in the case of purchasing a large ticket or very expensive item, some intermediaries offer financial assistance to help in the purchase of the product (Finch, 2012). With e-commerce, cutting out the intermediaries can save the consumer money by the manufacturer not having to share the profits, convenience comes from being able to shop from wherever you are, and also, if you have any questions about the product, live chats or production information tabs are there to get the answer from the experts (Finch, 2012). There are also disadvantages to both. In the traditional system of intermediaries, they handle many different products from many different manufacturers and how can a company be sure that the intermediary is putting the importance on serving their customer and prices may be higher in this system because of all the intermediaries that get their cut of the unit price. When there is an online presence, disadvantages of cutting out the intermediaries means cutting out relationships that were time consuming in building and whose to say that if your company needs them again, that they will place the same importance on your product as they did before and maybe your competitor has been treating them better or giving them more business.

E-commerce may be the future but there are still costs involved with getting there. Professional website developers are needed to design an appealing website that will generate sales, the most current product information must be maintained and be readily accessible on that website, the website must have the capability to process sales automatically, and the costs involved with keeping your website easy to find and on top of every search engine. The problem most businesses have with their ability to be efficient in the e-commerce world is their belief that they can do it. E-commerce is an important decision and one that can't be entered into half way. There must be total commitment by everyone up to the CEO.

Finch, J. (2012). Managerial marketing . Retrieved from https://ashford.content.edu

Isaleny Delgadillo

ThursdaySep 3 at 9:37pm

Manage Discussion Entry

The strategies to entering the global market is franchising and partnering. The primary advantage is that indirect exporting requires little financial commitment. Rather than investing company resources into the development of an internal operations group for export sales, the company can rely on the experience, expertise, and efficiency of firms that specialize in foreign sales. Financial risk is also reduced substantially since the payment to these agents is usually contingent on the sale of products. International marketing intermediaries with proven track records offer the seller an established presence in foreign markets, important contacts with prospective buyers, and expertise in the unique requirements of operating in foreign markets. Consequently, they also reduce the risks associated with making mistakes that will adversely impact the future potential of the product or brands in emerging markets Finch, J. (2012). I recently discovered a brand by the name of Quay from Australia. They are a brand of eyewear from sunglasses to blue light protection eyewear. The brand is fairly priced and very well marketed. They offer constant discounts and free pairs as well. The brand has now begun appearing I stores like Nordstroms and shipping individually through out the USA. McDonald’s is a well-branded global brand; they succeed in entering most countries worldwide and keeping their menus about the same but following international guidelines.

Reference: Finch, J. (2012). Managerial marketing . Retrieved from https://ashford.content.edu

Katherine Olivera

FridaySep 4 at 5:39pm

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Identify the strategies for entering into the global market.

At some point companies begin to evaluate the allurement for entering international markets. The drive organizations have when looking to expand beyond its national borders into new markets is motivated by potentially greater profits. Finding the best strategy needs to be determined once companies identify a foreign market it wants to enter. Strategies for entering the global market include indirect exporting, direct exporting, joint ventures, and direct investment (Finch, 2012, Chapter 14.3). As it sounds indirect exporting is producers selling its products to exporters, who then sell to the foreign customers. Using indirect exporting, the seller has no direct contact with foreign customers. Contrarily, direct exporting is producers selling its products directly to foreign customers. The company itself accepts the complete export process. Licensing is a contractual agreement through which a company offers proprietary assets to a foreign company, the licensee, in exchange for a royalty fee (Finch, 2012, Chapter 14.3). Franchising is also a contractual agreement like licensing in which the franchisor grants the franchisee the right to run a business selling products or services under the franchisors business model and trademark. Joint venture is when a company partners with a local company within in the foreign market. Direct investment is a market entry strategy where a company expands its operations to another country either by building new operational facilities or through acquisition of an existing business.

Assess the strengths and limitations of each.

A strength of indirect exporting is it requires little financial commitment. A limitation is an organization is still at bay and not connected with the county and has limited learnings about country characteristics. A strength of direct exporting is that is allows an organization to participate with minimal risk but the limitation is that consumers pay a higher cost for its products. Strengths of licensing and franchising is that it allows organizations to participate in foreign markets without large capital. A limitation is that it lacks control over marketing and limits direct participate in new markets. Strengths to joint venture are companies benefit from a partner’s knowledge of home markets and sometimes entry into another country can only happen this way. A limitation to joint venture is it has potential to turn a partner into a future competitor and requires sharing profits with the partner. A strength to direct investment is by having manufacturing facilities in foreign countries it provides access to cheaper labor and raw materials. A limitation is investing in foreign countries is costlier than exporting and is risky due to political hostility in host countries.

Give an example of a company that has made a success of doing business in the global economy

Adidas a German company has seen great success globally specifically in the US. President Mark King of Adidas North America describes its success in the US is due to its deep engagement in society and culture and bringing that together in performance and style of its products (Kell, 2016). Adidas has shown it has adapted to cultural preferences and the company heavily uses endorsement of celebrity and pop culture to captivate its target markets to promote the brand and it is working. By Adidas using direct investment in the US its allowing the company to directly impact its customers and in the long run can work to reduce cost associated with shipping goods to the US.

What lessons from McDonald’s success in the global marketplace are transferable across industries?

McDonald’s has been successful in globalization due to its ability to learn and understand cultural differences and consumer’s wants and needs within those global markets. Much of its success is due to localizing the menu to cater to foreign customers. In addition to localizing the menu, McDonald’s is also assessing opening vegetarian only restaurants in specific countries to cater to cultural’ s with vegetarian morality. McDonald’s ability to adapt its marketing mix to various foreign markets is the lesson that is transferable across industries.

Reference

Finch, J. (2012). Managerial marketing [Electronic version]. Retrieved from https://ashford.content.edu (Links to an external site.)

Kell, J. (2016, August 4). Why Adidas Is Outperforming Nike, Under Amour. Fortune. Retrieved from http://fortune.com/2016/08/04/adidas-outperforming-nike-ua (Links to an external site.)

Hearl Tackett

ThursdaySep 3 at 7:13pm

Manage Discussion Entry

The Strategies for entering into a global market and their strengths and weaknesses

Indirect and Direct Exporting

Indirect and direct exporting involves either directly or indirectly exporting through intermediaries that, in turn, sell to overseas customers (Finch, 2012). This has advantages and disadvantages. This strategy will minimize the company's risk and investment because they are just selling their products to the intermediary who then exports the product and sells it to the foreign customers. So, while it might be a good way to learn about global marketing, the company learns nothing about the country characteristics to which it was exported (Finch, 2012).

Licensing and Franchising

Licensing is a relatively low cost strategy to enter new markets and Franchising is a special form of licensing that contractually gives the rights to distribute and sell a company's products (Finch, 2012). Franchising can be profitable with little investment and enables companies to avoid tariffs but it also causes the company to lose total control over their marketing in the foreign country and may create a future competitor when and if the company decides to directly invest in the foreign country (Finch, 2012).

Joint Ventures

A joint venture is a strategy to enter a new market when a company finds someone to partner with who lives in the foreign country and knows the home markets of that country and may ease any political pressure towards the products home country. There is a huge investment required in a joint venture and the financial rewards must be shared , so it may have an effect on future relationships between the partners (Finch, 2012)

Foreign Direct Investment

Foreign direct investment is the strategy that you hear about on the political stage in these times. When a company expands or moves operations from their home country to another, that is called direct investment. When a company shows this type of commitment, sales can increase in the foreign country and, in the case of the United States, many of the citizens prefer American made products. Companies are also able to learn and better understand foreign cultures by immersion; however, brand identity may be hurt by association with a foreign country and sometimes cultural differences may be insurmountable (Finch, 2012).

Company that has been successful globally

Toyota is a company that has successfully entered the United States market from Japan. For many years, Toyota has been synonymous with quality but, due to events that happened in the history of the two countries, they had a hard time gaining ground against American made cars. Toyota started doing foreign direct investing in America by bringing their manufacturing plants to the United States. Now, citizens are able to say that my Toyota was built in America and, not only have they been the best selling cars in America for a long time, but they have created an institution with their management style that many companies in America are trying to emulate.

Finch, J. (2012). Managerial marketing . Retrieved from https://ashford.content.edu